Women and the Wealth Gap Presented by Mariko Chang, PhD

Income vs. Wealth Income = flow of money into a household over a period of time Wealth = net worth; value of a households assets minus debts at a single point in time

Wealth = Assets-Liabilities Assets: Savings, Checking Accounts Real Estate Owned Stocks, Bonds, Mutual Funds Business Assets 401k, IRAs Etc. Liabilities: Mortgage Credit Card Debt Loans Etc.

Why Wealth? Wealth inequality >> income inequality Top 1% - 17% income, 34% wealth Bottom 60% - 22% income, 4% wealth Wealth confers benefits income doesn’t Can generate further income Collateral for loans Passed from generation to generation Weather financial crises

Why Care About the Women’s Wealth Gap? About half of all households are non-married households About half of all marriages end in divorce Married women outlive husbands; widowhood is not a financial windfall for most Women spend more years single than married Women need more wealth because they live longer than men

Data 2007 Survey of Consumer Finances Sponsored by the Federal Reserve Board Collected prior to economic crisis People of color: Black, African American Hispanic (of any race) But: Asian, Native American, Other are combined Focus here on ages 18-64

2%2% 64% 59%

Median Wealth: Parents With Children Under Age 18

Racial Differences in Ownership of Cash Accounts, 2007

Racial Differences in Home Ownership, 2007

Racial Differences in Stock Ownership, 2007

Racial Differences in Business Asset Ownership, 2007

Racial Differences in Forms of Debt

Why? Earnings gap?

Median Earnings for Full-Time Workers Age18-64, 2007 WomenMen Never-Married $31,246$31,238100% Divorced $38,046$43,62187% Widowed $36,016$49,05173% Married $37,986$52,70672%

Even with the same incomes… Women would have less wealth: Women more likely to be custodial parents and support more people on one income Less disposable income to save or invest Women less likely to have access to the “wealth escalator”

Wealth Escalator Translates Income into Wealth More Quickly Fringe Benefits Tax Code Structure of Government Benefits

Wealth Escalator: Fringe Benefits Directly build wealth Ex: stock options, pension/401k contributions Indirectly build wealth Ex: health insurance, paid sick days Women less likely to work in jobs with fringe benefits Service occupations Part-time employment

Wealth Escalator: Tax Code Lower tax rates on certain forms of income Ex: long term capital gains Tax deferral Ex: employer-sponsored retirement contributions Tax deductions Ex: mortgage interest deductions

Wealth Escalator: Structure of Government Benefits Public Assistance Asset limits; “spend down assets” Social Insurance Ex: Social Security

Economic Crisis At all income levels women more likely to receive subprime loans Foreclosure High and rising unemployment

Main Points Wealth inequality is distinct from income inequality and much more severe Racial wealth gap cannot close unless gender wealth gap closes New strategies needed because excluded from existing strategies

Further Information: New book, Shortchanged: Why Women Have Less Wealth and What Can Be Done About It

Discussion Policy Implications Additional challenges due to economic crisis Sharing information about successful asset-building programs for women Others

Thank you